AbbVie, Rockwell Among 18 Companies To Announce Annual Dividend Increases In October

This is the latest in my series of articles where I provide predictions of annual dividend increases for a variety of long-term dividend growth companies. At the end of August, I provided predictions for 12 dividend growth companies that have historically announced annual payout increases during September. In this article I’ll look at another 18 dividend growth companies that I expect will announce their annual dividend increases in October.

Before I get to that, there were a few other long-term dividend growth companies that announced their annual increases in September:

– Chip designer and manufacturer Texas instruments (TXN) announced a 7.8% dividend increase to an annualized $4.96. This is the company’s 20th year of dividend growth; the company’s forward yield is 3.20%.

– Two banks extended their dividend growth streak to 13 years. U. S. Bancorp (USB) announced a 4.3% increase to an annualized $1.92, and Fifth Third Bancorp (FITB) announced a 10% boost to an annualized $1.32. U. S. Bancorp’s forward yield is now 4.76% while Fifth Third’s forward yield is 4.13%.

– Black Hills Corporation (BKH) announced a 5.3% boost to an annualized $2.38. The increase, which extends the company’s dividend growth record to 53 years, gives Black Hills a forward yield of 3.51%.

Here are the results from my predictions from September (as always, the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in October:

(All yields are based on stock prices at the market close on Friday, September 30th.)

Results for Dividend Increase Announcements from September

Accenture plc (ACN) – 12 years of dividend increases

Prediction: 9.3 – 11.3% increase to $4.24 – $4.32

Actual: 15.5% increase to $4.48

Forward yield: 1.74%

The consulting company is showing accelerating dividend growth; this latest increase is higher than the 11% average growth rate over the last decade.

BancFirst Corporation (BANF) – 28 years

Prediction: 2.8 – 5.6% increase to $1.48 – $1.52

Actual: Deferred to October

Regional bank BancFirst has yet to announce its latest quarterly dividend.

Brady Corporation (BRC) – 37 years

Prediction: 4.4 – 6.7% increase to $0.94 – $0.96

Actual: 2.2% increase to $0.92

Forward yield: 2.20%

Despite increasing EPS growth, the dividend boosts continue to be small from Brady Corp.

The First of Long Island Corporation (FLIC) – 25 years

Prediction: 10.0 – 12.5% increase to $0.88 – $0.90

Actual: 5.0% increase to $0.84

Forward yield: 4.87%

I had expected that the bank’s 11% EPS growth would drive a larger dividend boost.

Honeywell International (HON) – 11 years

Prediction: 4.6 – 6.1% increase to $4.10 – $4.16

Actual: 5.1% increase to $4.12

Forward yield: 2.47%

Honeywell’s heavy debt load is keeping dividend growth down.

Ingredion Inc. (INGR) – 13 years

Prediction: 1.5 – 3.1% increase to $2.64 – $2.68

Actual: 9.2% increase to $2.84

Forward yield: 3.53%

This is the largest increase from the food processor in four years.

Lockheed Martin Corporation (LMT) – 19 years

Prediction: 7.1 – 8.9% increase to $12.00 – $12.20

Actual: 7.1% increase to $12.00

Forward yield: 3.11%

Dividend growth is slowing at the mega-defense contractor due to reduced earnings.

McDonald’s Corporation (MCD) – 45 years

Prediction: 6.9 – 8.7% increase to $5.90 – $6.00

Actual: Deferred to October

McDonald’s should announce its annual increase in the first week of October.

Microsoft (MSFT) – 19 years

Prediction: 11.3 – 16.1% increase to $2.76 – $2.88

Actual: 9.7% increase to $2.72

Forward yield: 1.17%

Despite continued growth in all business sectors and especially cloud services, Microsoft slowed its dividend growth this year.

New Jersey Resources Corp. (NJR) – 28 years

Prediction: 6.2 – 9.0% increase to $1.54 – $1.58

Actual: 7.6% increase to $1.56

Forward yield: 4.03%

The utility continued to grow its dividend in the 7% range.

OGE Energy Corp. (OGE) – 18 years

Prediction: 6.1 – 8.5% increase to $1.74 – $1.78

Actual: 1.0% increase to $1.6564

Forward yield: 4.54%

The aftereffects of writing down the value of investments in 2020 continue to overhang the Oklahoma utility.

Philip Morris International (PM) – 15 years

Prediction: 4.0 – 4.8% increase to $5.20 – $5.24

Actual: 1.6% increase to $5.08

Forward yield: 6.12%

While the company is guiding to EPS growth in the high single digit percentages in 2022, Philip Morris’ latest dividend boost is below the company’s average growth rate.

Verizon Communications Inc. (VZ) – 18 years

Prediction: 1.6 – 3.1% increase to $2.60 – $2.64

Actual: 2.0% increase to $2.61

Forward yield: 6.87%

Verizon’s long-term dividend growth rate remains solidly in the 2% range.

Williams-Sonoma Inc. (WSM) – 17 years

Prediction: 17.9 – 21.8% increase to $3.68 – $3.80

Actual: 0% increase to $3.12

Forward yield: 2.65%

Over the past few years, the furniture and home products company has announced two dividend increases a year. Williams-Sonoma decided to defer its usual fall increase.

Predictions for Dividend Increases in October

There are 18 companies I expect to announce their annual dividend increases in October. First, here are my predictions for three featured companies:

AbbVie Inc. (ABBV) – 10 years of dividend growth

Drugmaker AbbVie is establishing itself as a dividend growth company, separate from the spinoff from Abbott Labs in 2013. With a 5-year compounded growth rate of 17%, AbbVie has rewarded investors with rapid dividend growth, powered by Humira sales and an expanded drug pipeline. The company continues to perform, with expectations of 9% adjusted EPS growth in 2022 following 20% adjusted EPS growth in 2021. However, despite increasing sales for other drugs, like Skyrizi and Rinvoq, Humira’s outsized impact on AbbVie’s drug portfolio and the introduction of competitors are going to slow down earnings growth. In fact, the 9% expected growth for 2022 represents a lowering of guidance; AbbVie initially expected 11% adjusted EPS growth. What does this mean for investors? Well, the company has committed to building a dividend growth history and it will continue to do that for the foreseeable future. But dividend growth will continue to slow unless and until AbbVie develops another wildly profitable drug like Humira. I expect this year’s increase to be similar to or slightly below last year’s 8.4% boost.

Prediction: 6.4 – 8.2% increase to $6.00 – $6.10

Predicted Forward Yield: 4.47 – 4.55%

American Electric Power Company, Inc. (AEP) – 13 years

This electric utility has a history of very consistent 5 – 6% annual dividend increases, consistent with its long-term growth rate target. And AEP’s earnings performance is meeting its goals. The company grew operating EPS by nearly 7% in 2021 and is projecting an additional 5% growth in 2022. AEP’s current focus is on “de-risking” – the company has a heavy debt load and diverse business lines. As part of this process and to simplify the business, AEP is selling its Kentucky operations and is planning on selling off its unregulated renewables portfolio. The asset sales will generate cash which will then be used to improve the reliability of the company’s transmission infrastructure. The bottom line is that while the asset sales won’t produce any additional cash flow, it improves AEP’s business and reduces risk. Investors shouldn’t expect any change to company’s pattern of dividend growth.

Prediction: 4.5 – 5.5% increase to $3.26 – $3.30

Predicted Forward Yield: 3.77 – 3.82%

Rockwell Automation, Inc. (ROK) – 13 years

Rockwell Automation helps businesses implement automation across a variety of industries, including semiconductors, oil and gas, and household goods. The company has compounded its dividend by 10% over the last decade, but last year boosted its payout by less than 5% as the company dealt with supply chain issues and a decent debt load. Both the debt load and the supply chain issues remain, and while the company grew adjusted EPS by 20% in fiscal 2021 (which ended September 30, 2021), Rockwell Automation has gradually lowered its 2022 EPS guidance and is now advising investors to expect effectively zero adjusted EPS growth. What does this mean for this year’s dividend boost? The company’s payout ratio of 50% means the company has room to grow the payout, but I expect that the company’s latest increase will be in the 5% range like last year’s.

Prediction: 4.5 – 5.4% increase to $4.68 – $4.72

Predicted Forward Yield: 2.18 – 2.19%

Here are my predictions for 15 other companies which should announce their annual increases in October:

Company (Ticker)	Years of Increases	Industry	Prediction (%)	New Annual Rate
A. O. Smith (AOS)	29	Industrials	10.7% – 14.3%	$1.24 – $1.28
A. O. Smith manufactures boilers and hot water heaters for commercial and residential use. The company expanded to China several years ago and more recently to India. With continued lockdowns, sales in China are down but they’re more than offset by sales in North America and in India. The company should reward investors with increasing dividend growth from last year’s 8% boost.
Amphenol Corp. (APH)	11	Electronic Components	20.0% – 27.5%	$0.96 – $1.02
This manufacturer of electrical components has established an outstanding dividend growth record, with a 5-year compounded growth rate of 19% and last year, the company boosted its payout by 38%. With 2021 adjusted EPS growth of 33% and 1st half adjusted EPS growth rate of 26%, investors can look forward to another massive dividend increase.
Brown & Brown (BRO)	28	Insurance	9.8% – 12.2%	$0.45 – $0.46
Brown & Brown grew non-GAAP EPS by 31% in 2021 to $2.19, and followed up with another 8.5% non-GAAP EPS growth in the first half of 2022. The insurer should announce another dividend boost like its decade-long growth rate of 9% or last year’s 11% increase.
Calavo Growers (CVGW)	9	Consumer Defensive	0.9% – 1.7%	$1.16 – $1.17
Calavo Growers produces and markets a variety of fresh produce, primarily avocados, to consumers and businesses. The company makes one dividend payment a year. With 2021 adjusted EPS down 78% to 35 cents, and 2022 adjusted EPS growth below 10%, the company will have a tough time keeping its streak alive. Due to the single annual dividend payment, Calavo Growers needs to increase its payout here – look for an increase of 1 or 2 cents, only to keep the dividend growth going.
DTE Energy Company (DTE)	12	Utilities	1.1% – 2.3%	$3.58 – $3.62
After spinning off its midstream business in 2021, the Michigan-based utility announced its regular dividend increase last fall. Operating EPS grew by 7% in 2021, but are expected to come in flat in 2022. This should limit DTE to a minimal dividend boost.
The Gorman-Rupp Company (GRC)	16	Industrials	5.9% – 8.8%	$0.72 – $0.74
Gorman-Rupp designs, manufactures, and markets pumps and pump systems worldwide. 2021 brought 8% growth in sales and an associated 17.5% growth in adjusted EPS. The company recently acquired privately-held pump manufacturer Fill-Rite, which should add to earnings going forward. For now, EPS in the first half of 2022 are down 8% due primarily to extra costs associated with the acquisition, which may limit this year’s boost.
Lincoln Electric Holdings, Inc. (LECO)	27	Industrials	10.7% – 14.3%	$2.48 – $2.56
The designer and manufacturer of industrial welding equipment continues to grow sales and earnings, despite the economic slowdown. Adjusted EPS in the first half of 2022 grew 38% compared to the same period in 2021. This follows up to 50% adjusted EPS growth in the full year of 2021. Look for another boost bigger than last year’s 10% increase.
Middlesex Water Company (MSEX)	18	Utilities	2.6% – 4.3%	$1.19 – $1.21
After EPS fell 10% in 2021, the water and wastewater utility’s earnings are up 77% in the first quarter of 2022 on an authorized rate increase. However, investors will have to wait to see the benefits until next year – this year’s payout boost will be limited to the low single digits.
Northwest Natural Holding Company (NWN)	66	Utilities	0.50%	$1.94
Based in Portland, Oregon, this natural gas and water utility has boosted its dividend by a single penny for each of the last 7 years. Although the company recently reaffirmed a long term EPS growth target of 4 – 6%, the company is guiding to flat earnings this year. Investors will see an 8th year of annual dividend growth of 1 penny per share.
Prosperity Bancshares (PB)	24	Financial	3.8% – 5.8%	$2.16 – $2.20
This Texas-based bank has traditionally boosted its dividend by 10%, but last year came in with a 6% increase. This year, the dividend will probably be smaller yet, as EPS in 2021 were flat and down 4% in the first half of 2022.
RPM International (RPM)	48	Materials	2.5% – 5.0%	$1.64 – $1.68
This chemical company manufactures many products for the construction and housing market. RPM is warning about reduced international sales due to the strong dollar. In addition, RPM’s adjusted EPS fell 2% in FY 2022, which concluded on June 30th. Pressures on the housing market will also put pressures on RPM’s earnings going forward, so the company’s next dividend increase will likely be below last year’s 5% boost.
Stepan Company (SCL)	54	Materials	9.0% – 11.9%	$1.46 – $1.50
Stepan grew EPS by nearly 9% in 2021 and another 16% year-over-year in the first half of 2022. Although the company is warning about inflationary headwinds, the specialty chemical company should be able to maintain its 10% historic dividend growth rate.
Standex International Corp. (SXI)	12	Industrials	11.5% – 15.4%	$1.16 – $1.20
With EPS up 70% in fiscal 2022 (ending June 30th), the manufacturer of specialty industrial machinery should return to double-digit payout growth after last year’s 8% boost.
Tompkins Financial Corp. (TMP)	36	Financial	4.4% – 6.1%	$2.38 – $2.42
After 20% growth in 2021, EPS are down 7% in the first half of 2022. Still, this New York State-based bank should be able to continue its history of 5% dividend growth.
Waste Connections, Inc. (WCN)	12	Industrials	10.8% – 15.2%	$1.02 – $1.06
This Canadian solid waste services company routinely boosts its dividend by at least 10% and has grown adjusted EPS by 20% in the first half of 2022.

Click to enlarge

Summary

In contrast to August’s dividend increases, many of September’s boosts were very modest – mostly in the low-to-mid single digit percentages. Even companies that usually boost their payouts by 10%+ didn’t follow through this year. Microsoft, First of Long Island and Williams-Sonoma, despite their historical dividend growth rates, fell short of 10% this year, with Williams-Sonoma skipping its annual fall boost this year.

Although expected to announce their annual increases in September, it looks like McDonalds and BancFirst Corporation will make their announcements in early October.

And speaking of October, we’ll see several good increases. Amphenol, Waste Connections, Lincoln Electric, Standex International, and A. O. Smith should all reward investors with double-digit boosts. And two months after Dover Corporation extended its dividend growth streak to 66 years, utility Northwest Natural Holding will extend its streak to 67 years.